Putting the “A” back into FP&A: Automate and transform

7th March 2017

In the first two articles of this series we discussed how the role of finance was evolving from that of primarily scorekeepers of past performance to providers of forward looking business insights. We also discussed how leading finance teams are now using data discovery and exploratory analytics to capture those important insights. 

In this article we step back and look at the entire journey that finance organizations are taking to automate and transform their processes. You can think of it as a three step journey:

1.     Automate repeatable processes

2.     Adopt best practices

3.     Link finance & operational processes and add predictive capabilities

 

Automate repeatable processes

Leading finance teams around the world are using automation to substantially reduce the amount of time they spend on routine manual processes. Automation provides benefits throughout the planning cycle, from the collection of data in a single reporting and analysis solution to the updating of reports in real time, through integration with corporate data sources. In fact, advanced applications can create dynamic reports that update automatically when numbers change in underlying data sources. 

In addition to saving time, automation enhances security, control and governance for recurring, multi-author reports and presentations. Having the process automated reduces the chance of errors caused by manual cut-and-paste procedures and mistakes in keying data—both of which are well-known hazards of spreadsheet-based processes.

 

Adopt best practices

Once automation has made basic finance processes less burdensome, members of the finance team can spend more time on actual analysis and other activities that add value. They can adopt best practices such as driver-based planning and rolling forecasts that are revised as often as needed, based on input from more people in more diverse business functions. Financial controls can also be integrated with the consolidation process, easing regulatory compliance. 

More reliable decision-support (a product of automation) enables a deep and timely understanding of actual performance, and supports a forward-looking view of the business. Instead of arguing over numbers, the finance team can focus on analyzing critical business drivers, and make finance a more active partner in guiding the enterprise. With plans and forecasts linked to business drivers, the organization can respond and adapt to changing business conditions with greater speed and agility.

 

Link finance & operational processes and add predictive capabilities

After seeing the benefits of best-practice policies and processes in finance, organizations can take steps to make collaboration, shared objectives, and improved visibility available across the enterprise in order to close the loop between operational and financial results. 

For example, sales personnel, who are closest to customers, can capture sales projections and use them to revise revenue plans that update P&L projections. Based on these changes, marketing managers revise their promotion schedules to align with the updated sales projections. Call-center managers, in their turn, revise staffing plans up or down, based on the impact of the sales forecasts on expected call volumes. And the new staffing plans—indicating higher or lower costs—update the P&L projections once again.  

A single technology platform enables reliable and continuous connections between corporate strategy, financial management, and operational execution. Scorecards and dashboards can be deployed to link strategic objectives and initiatives with key performance indicators. Finally, with the benefit of predictive capabilities, it’s possible to identify critical performance gaps with enough lead time to weigh alternatives and enable effective response.

Companies that automate and transform their finance processes gain speed, agility and foresight.

 

From insight to action

Advanced analytics can provide valuable business insights. But those insights are only valuable within the context of a decision-making process. The quality of decision-making, of course, depends on the information at hand—its accuracy, timeliness, and completeness. As we mentioned in the last article, data need to be examined in all of its dimensions, as well as how the different dimensions relate to each other. And it’s there in the relationships, especially the unexpected relationships and correlations, where we find perhaps the greatest benefit of today’s analytic solutions. That’s where the data-driven insight about a customer category, a new market or a possible innovation meets human creativity. That’s where data and analytics can lead to the “eureka” moments that we all hope for. 

Throughout the organization, from top to bottom and across functions and divisions, forward-looking performance management keeps you consistently up to date, with timely insights into past, present, and future performance. Real-time visibility into operations enables finance leaders to gain a clearer focus on the value-driving activities that help the business achieve its goals. And people at all levels can see how they contribute to the strategy and help drive more effective, more consistent execution. 

To learn how these principles function in the real world, read a case study about a company that used predictive analytics from IBM to enhance its sales forecasting. Learn how German wine producer Rotkäppchen-Mumm improved its ability to produce optimal product quantities based on accurate insights into demand and future trends. 

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